The Antitrust Authority announces its intention to impose financial sanctions totaling around NIS 30 million on Bezeq

Today (Wed.) the Israel Antitrust Authority announced its intention to impose financial sanctions of around NIS 30 million on Bezeq, for abusing its monopoly over communications infrastructures in a manner liable to harm competition for the supply of communications services

The Authority also announced its intention to impose financial sanctions of about NIS 700,000 on a senior official in the company.

The Antitrust Authority Director-General notified Bezeq Israeli Communications Company Ltd. today (Wed.) that she is considering determining that Bezeq abused its control of passive communications infrastructure in a manner liable to harm competition. The suspected abuse involved blocking and obstructing competitors that wished to deploy a line-based communications network over the Bezeq infrastructure. This conduct could impede the development of competition in the supply of communications services such as internet, television and line-based telephony. For this reason, the Director-General is considering imposing financial sanctions on Bezeq amounting to around 30 million shekels.

The Director-Genera 's announcement comes at the end of an examination by the Antitrust Authority that was conducted over the course of around a year. During this time, the Authority examined Bezeq's conduct regarding the use of its passive infrastructure and for this purpose collected information from numerous sources, including Bezeq itself, its competitors and potential competitors, as well as from the Ministry of Communications. The Authority also consulted foreign authorities.

The background to the matter is the intention of new players to deploy independent fiber optics based communications networks in Israel , according to the framework of a reform of the wholesale market initiated by the Ministry of Communications back in 2012.

Bezeq owns passive communications infrastructure, consisting of a system of pipes, pillars and other installations covering the entire country, through which communications cables can be passed into buildings. In many places in Israel, the only passive infrastructure available for communications cables belongs to Bezeq. Setting up an independent passive infrastructure, in addition to Bezeq's, in populated areas would be extremely difficult, due to the high costs, the extensive excavation work involved, the disruption this would cause to the general public and the numerous permits required to lay the infrastructure. Therefore, access to Bezeq's passive infrastructure is essential for deploying any line-based communications networks to the homes of communications consumers.

Applications to Bezeq from companies, such as Cellcom and Partner, that wished to use Bezeq's passive infrastructure forthe deployment of their own networks, was met with numerous obstacles and delays.

The Authority's examination focused on two main obstacles that Bezeq put in the way of competitors wishing to use its passive infrastructure to deploy a line-based communications network.

Firstly, Bezeq allegedly denied competitors access to the end sections of the passive infrastructure connecting the street to the buildings. Bezeq allowed deployment over its passive infrastructure only up to the last manhole before the infrastructure crosses into private land. (The manhole is a hole built to provide access from the ground to the underground pipes.) The sections where Bezeq did not allow deployment of optical fibers constitute a considerable and essential part of the passive infrastructure required to reach into customers' homes. Bezeq's refusal means that competitors have to dig and bury their own passive infrastructure from the last manhole before private land up to the house itself. This involves excavation work, disruption for the public, obtaining permits from various authorities and receiving the consent of residents to dig up the property. All this translates into expensive, risky projects entailing considerable extra costs and significant delays in setting up the communications network.

Bezeq denies its competitors access to its infrastructure on the grounds of buildings, while in other cases allowing similar access to non-competing companies. This happened with Hot, starting from the period when Bezeq and Hot did not compete, and with Yes, a subsidiary of Bezeq.

Secondly, Bezeq required competitors that wished to deploy fiber optics communications networks over its passive infrastructure to cut and reconnect the optical fiber cable at several points on the way to the customer's house. This requirement also imposes high costs on the companies as well as affecting the quality of the network they provide. Bezeq's demands prevented its competitors from deploying fiber optic cables over its passive communications infrastructure.

Bezeq only withdrew its demand to cut and reconnect the cables when the Ministry of Communications decided that this demand was unjustified, since, among other things, it would make network deployment more expensive, affect the quality of the service provided, and add points of possible failure and delay in the deployment. The Authority found that when Bezeq deployed its own fiber optic network, it did not cut the cables to the same extent that it demanded from its competitors.

These actions by Bezeq are likely to affect the development of competition in the supply of communications services, because the difficulties will likely deter, delay or even prevent competitors from deploying their networks and expanding their activity. The public is therefore denied the development of competition that could lead to considerable improvements in the quality and price of services such as television, internet and landline telephones.

Therefore, Bezeq is prima facie abusing its status as a monopoly by unreasonably refusing to give access to its monopolistic product.

The Commissioner is also considering sanctions amounting to NIS 700,000 on a senior official in Bezeq, who was found to be involved in the company's policy and to have carried out the alleged breaches.

Bezeq has the right to put its case before the Commissioner before she makes a final decision.